Justia Insurance Law Opinion Summaries

Truck Insurance Exchange (Truck) filed a lawsuit against Federal Insurance Company (Federal) alleging fraud, unjust enrichment, and seeking rescission of a settlement agreement. Truck claimed that Federal fraudulently misrepresented and concealed the voluntary nature of its decision to pay defense costs for Moldex-Metric, Inc. (Moldex) under an umbrella policy. Truck argued that it would not have agreed to pay $4.9 million in settlement had it known Federal contributed to Moldex’s defense voluntarily “at its own expense.”The Superior Court of Los Angeles County initially ruled in favor of Federal, granting summary judgment on the basis that Federal had no duty to defend Moldex under its umbrella policy. Truck appealed, and the Court of Appeal affirmed the trial court’s decision, rejecting Truck’s assertion that it reserved the right to recoup defense fees and indemnity costs after the settlement agreement. Truck then filed the current fraud action, alleging that Federal concealed its voluntary business decision to defend Moldex.The Court of Appeal of the State of California, Second Appellate District, reviewed the case. Truck contended that the trial court failed to address its claim for fraudulent concealment and only considered the misrepresentation theory. The appellate court agreed with Truck, finding that the trial court did not consider the fraudulent concealment claim despite Truck’s objection. The appellate court determined that Truck did not unreasonably neglect to protect itself against the alleged fraudulent concealment by Federal, rendering it extrinsic and not barred by the litigation privilege.The Court of Appeal reversed the judgment on Truck’s fraudulent concealment cause of action and remanded the matter to the trial court for a new trial to consider Truck’s fraudulent concealment claim and any other derivative causes of action. The judgment was otherwise affirmed, and Truck was awarded costs on appeal. View "Truck Ins. Exchange v. Fed. Ins. Co." on Justia Law

BlueCross BlueShield of Tennessee (BlueCross) is an insurer and fiduciary for an ERISA-governed group health insurance plan. A plan member in New Hampshire sought coverage for fertility treatments, which BlueCross denied as the plan did not cover such treatments. The Commissioner of the New Hampshire Insurance Department initiated an enforcement action against BlueCross, alleging that the denial violated New Hampshire law, which mandates coverage for fertility treatments. BlueCross sought to enjoin the state regulatory action, arguing it conflicted with its fiduciary duties under ERISA.The United States District Court for the Eastern District of Tennessee denied BlueCross's request for relief and granted summary judgment to the Commissioner. The court found that the Commissioner’s enforcement action was against BlueCross in its capacity as an insurer, not as a fiduciary, and thus was permissible under ERISA’s saving clause, which allows state insurance regulations to apply to insurers.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court’s decision. The Sixth Circuit held that the Commissioner’s action was indeed against BlueCross as an insurer, aiming to enforce New Hampshire’s insurance laws. The court noted that ERISA’s saving clause permits such state actions and that BlueCross could not use its fiduciary duties under ERISA to evade state insurance regulations. The court also referenced the Supreme Court’s decision in UNUM Life Insurance Co. of America v. Ward, which established that state insurance regulations are not preempted by ERISA when applied to insurers. Thus, the Sixth Circuit concluded that ERISA did not shield BlueCross from the New Hampshire regulatory action. View "BlueCross BlueShield of Tennessee v. Nicolopoulos" on Justia Law

The case involves insurance policies issued by certain surplus lines insurers at Lloyd’s, London, which contain identical arbitration clauses. The insured parties, 3131 Veterans Blvd LLC and Mpire Properties LLC, attempted to sue the insurers in Louisiana state court. The insurers then sued in New York federal court to enforce the arbitration clauses under the Federal Arbitration Act (FAA) and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The insured parties argued that the arbitration clauses were unenforceable under Louisiana law, which prohibits such clauses in insurance contracts, and that the McCarran-Ferguson Act (MFA) allows state insurance laws to reverse preempt federal legislation and non-self-executing treaty provisions.The United States District Court for the Southern District of New York ruled in favor of the insured parties, holding that Louisiana law prohibits arbitration clauses in insurance contracts and that the FAA and the New York Convention were reverse-preempted under the MFA, based on the Second Circuit’s previous decision in Stephens v. American International Insurance (Stephens I).The United States Court of Appeals for the Second Circuit reviewed the case. The court concluded that its reasoning in Stephens I had been undermined by the Supreme Court’s decision in Medellín v. Texas, which established a different test for determining whether a treaty provision is self-executing. Applying the Medellín test, the court found that Article II Section 3 of the New York Convention is self-executing. As a result, the court abrogated Stephens I to the extent that it held that Article II Section 3 is not self-executing, reversed the district court decisions, and remanded the matters for further proceedings consistent with its opinion. View "Certain Underwriters at Lloyds, London, v. 3131 Veterans Blvd LLC" on Justia Law

Mullins Food Products, Inc. was sued in Illinois state court for violating the Biometric Information Privacy Act (BIPA). Mullins requested its liability insurer, Citizens Insurance Company of America, to defend the suit, but Citizens declined and instead filed a federal suit seeking a declaratory judgment that it had no duty to defend or indemnify Mullins based on exclusions in the commercial liability insurance policies issued to Mullins in 2015, 2016, and 2017. While the federal suit was pending, Mullins settled the state-court action.The United States District Court for the Northern District of Illinois agreed with Citizens that the policy exclusions relieved Citizens of the duty to defend or indemnify Mullins. Specifically, the court found that the Access or Disclosure of Confidential or Personal Information exclusion and the Recording and Distribution of Material or Information in Violation of Law exclusion barred coverage for BIPA claims. The district court also ruled against Mullins on its counterclaim for breach of contract, reasoning that Citizens' timely filing of the declaratory judgment action precluded a finding of breach.The United States Court of Appeals for the Seventh Circuit reviewed the case and vacated the district court's decision. The appellate court concluded that the Access or Disclosure exclusion in the 2016 and 2017 policies barred coverage for BIPA claims, but the Statutory Violations exclusion did not. Therefore, Citizens had a duty to defend and indemnify Mullins under the 2015 policy, assuming Mullins provided timely notice of the state-court action. The appellate court remanded the case for further proceedings to determine the timeliness of Mullins' notice and to address Mullins' claim for reimbursement of defense costs. View "Citizens Insurance Company of America v Mullins Food Products, Inc." on Justia Law

PorterCare Adventist Health Systems had inadequate surgical-sterilization procedures for about two years, leading to over $40 million in liability from thousands of patients' claims. PorterCare sought coverage from AdHealth, its excess-liability insurer, for the full $40 million policy limit, arguing that the claims arose from one medical incident. AdHealth refused coverage, asserting that a medical incident covers injuries to a single person, not multiple people, and filed a complaint seeking a declaratory judgment. PorterCare counterclaimed for declaratory judgment and breach of contract.The United States District Court for the District of Colorado granted summary judgment to AdHealth, agreeing with its interpretation that a medical incident is limited to the acts or omissions causing injury to one person. The court found that AdHealth owed coverage only for the claims of a single patient that trigger the excess policy’s liability threshold, not for multiple patients' claims grouped together.The United States Court of Appeals for the Tenth Circuit reviewed the case and affirmed the district court's decision. The appellate court held that the policy’s definition of “medical incident” unambiguously applies to the injuries of a single person. Therefore, AdHealth is liable only for individual claims exceeding PorterCare’s $2 million self-insurance retention, not for the aggregated claims of multiple patients. View "Adhealth, Limited v. PorterCare Adventist Health Systems" on Justia Law

Kepali Group procured insurance for its fleet of vehicles through an agent at Brown & Brown of Florida, with Prime Property & Casualty Insurance Company issuing a commercial automobile policy for the period from January 23, 2019, to January 23, 2020. The policy included a provision for after-acquired vehicles, requiring notification within 30 days of acquisition for coverage. On December 6, 2019, a 2009 Toyota Sienna owned by Kepali was involved in an accident. Kepali had acquired the vehicle on September 30, 2019, and notified Brown to add it to the Prime policy. Prime issued a quote for the additional premium, but Kepali did not pay it, and Prime did not issue an endorsement for the vehicle.The United States District Court for the Southern District of Florida ruled that Brown was acting as Kepali’s agent, not Prime’s, when attempting to procure insurance for the 3985 Toyota. However, the court concluded that the vehicle was covered under the policy’s after-acquired auto provision because Kepali met the two conditions: Prime covered all of Kepali’s vehicles, and Kepali notified Prime within 30 days of acquiring the vehicle. The court ruled that Prime had a duty to defend Kepali and Mr. Rodriguez but deferred ruling on the duty to indemnify until the underlying suit was resolved. The court granted summary judgment against Kepali and Mr. Rodriguez on their reformation and promissory estoppel claims and dismissed the remaining claims as moot.The United States Court of Appeals for the Eleventh Circuit affirmed the district court’s ruling. The court held that the after-acquired auto provision did not require payment of an additional premium within 30 days for coverage to continue. The court also found that the premium audit provision allowed Prime to compute the final premium and bill Kepali, and that Prime failed to perform this audit or send a bill. Therefore, Prime could not terminate coverage for non-payment without following the policy’s cancellation procedures. The court concluded that Prime had a duty to defend Kepali and Mr. Rodriguez in the underlying state court action. View "Prime Property and Casualty Insurance Company v. Kepali Group, Inc." on Justia Law

Two former police officers, Mark Zukowski and Joshua Ruggiero, were injured in the line of duty and subsequently awarded both accidental disability retirement (ADR) benefits and workers' compensation benefits under Maryland's Workers' Compensation Act. The ADR benefits exceeded the workers' compensation benefits, resulting in an offset that left the officers with only a small portion of the workers' compensation benefits. The officers' attorney sought fees based on the total workers' compensation award before the offset was applied.The Maryland Workers' Compensation Commission awarded attorney's fees based on the reduced amount of workers' compensation benefits after applying the statutory offset. The Circuit Court for Anne Arundel County affirmed the Commission's decision, holding that attorney's fees should be calculated after the offset.The Supreme Court of Maryland reviewed the case and affirmed the lower courts' decisions. The Court held that the terms "benefits" and "compensation" are interchangeable in this context, meaning that attorney's fees should be calculated based on the amount of compensation actually payable to the claimant after applying the statutory offset. The Court emphasized that the attorney's fees are a lien on the compensation awarded, which is defined as the money payable to the injured employee. Therefore, the offset must be applied before calculating the attorney's fees. The Court also rejected the argument that this interpretation was unconstitutional, stating that the attorney voluntarily agreed to the fee arrangement and was aware of the statutory provisions governing attorney's fees. View "Zukowski v. Anne Arundel Cnty." on Justia Law

State Farm Mutual Automobile Insurance Company and others filed a lawsuit against Michael LaRocca and his associated chiropractic clinics, alleging that the clinics submitted fraudulent insurance claims for services that were not medically necessary. The clinics, owned by LaRocca, were operating under an exemption from Florida's Health Care Clinic Act, which requires clinics to be licensed unless they are wholly owned by licensed health care practitioners who are legally responsible for compliance with all federal and state laws.The United States District Court for the Middle District of Florida denied State Farm's motion for partial summary judgment, rejecting the argument that LaRocca's failure to ensure compliance with all laws invalidated the clinics' exemption and rendered their charges noncompensable. The court found that the term "legally responsible" did not impose an affirmative duty on LaRocca to ensure compliance with all laws but rather indicated accountability for violations.The United States Court of Appeals for the Eleventh Circuit reviewed the case and determined that the interpretation of "legally responsible" within the context of Florida's Health Care Clinic Act was a matter best decided by the Florida Supreme Court. The Eleventh Circuit certified the question to the Florida Supreme Court, seeking clarification on whether the term imposes an affirmative duty on clinic owners to ensure compliance with all federal and state laws to maintain their exemption status. The Eleventh Circuit deferred its decision pending the Florida Supreme Court's interpretation. View "State Farm Mutual Automobile Insurance Company v. LaRocca" on Justia Law

In 2005, Island Pointe, LLC contracted Complete Building Corporation (CBC) to construct a condominium project, Palmetto Pointe at Peas Island. CBC subcontracted Tri-County Roofing (TCR) for roofing and related work. In 2014-2015, Palmetto discovered construction defects and sued CBC, TCR, and others for negligence and breach of warranty. Palmetto received $6,800,000 in settlements, including $1,000,000 from CBC's insurer for a covenant-not-to-execute and $1,975,000 from four other defendants.The trial began in May 2019, and the jury found CBC and TCR liable for $6,500,000 in actual damages and $500,000 each in punitive damages. The trial court apportioned 5% liability to two other defendants, making CBC and TCR jointly and severally liable for the remaining 90% of actual damages. TCR sought setoff for the $1,000,000 payment and the settlements from the four other defendants. The trial court denied TCR's motion for setoff, except for partial amounts conceded by Palmetto.The South Carolina Supreme Court reviewed the case. It reversed the court of appeals' decision, holding that TCR is entitled to set off the full $1,000,000 paid by CBC's insurer. The court affirmed the lower court's decision regarding the settlements from Novus, Atlantic, H and A, and Cohen's, agreeing that the trial court reasonably allocated the settlement amounts. The case was remanded to the trial court for the calculation of the judgment against TCR. View "Palmetto Pointe v. Tri-County Roofing" on Justia Law

James Cooper was injured in a car accident while riding as a passenger in a car owned by Rick Huffman. Both Cooper and Huffman were employees of Pison Management, LLC, and were driving to a jobsite during their employment. Cooper's injuries exceeded the at-fault driver's insurance limits, so he sought underinsured motorist (UIM) coverage under Pison’s commercial automobile policy issued by Erie Insurance Property & Casualty Company. The policy provided liability coverage for two vehicles owned by Pison and a class of non-owned vehicles, but UIM coverage was only provided for the owned vehicles. Erie denied Cooper’s claim for UIM coverage.Erie filed a suit in federal district court seeking a declaration that the policy did not provide the UIM coverage Cooper sought. Cooper counterclaimed, arguing that West Virginia Code § 33-6-31 required Erie to offer UIM coverage for the class of non-owned vehicles. The district court ruled in favor of Cooper, holding that the statute required Erie to make a commercially reasonable offer of UIM coverage for all vehicles covered by the liability policy, including non-owned vehicles. Erie appealed this decision to the United States Court of Appeals for the Fourth Circuit.The Supreme Court of Appeals of West Virginia reviewed the case. The court held that West Virginia Code § 33-6-31 does not require an insurer to offer UIM coverage for a class of non-owned vehicles when a commercial automobile insurance policy insures certain owned vehicles and a class of non-owned vehicles for liability protection. The court reasoned that UIM coverage is intended to protect the named insured and permissive users of the named insured’s vehicle, not to extend to non-owned vehicles. Therefore, the court answered the certified question in the negative and dismissed the case from its docket, returning the matter to the Fourth Circuit for further proceedings consistent with this opinion. View "Erie Insurance Property & Casualty Company v. Cooper" on Justia Law